Premier Danny Williams has taken on prime ministers and oil executives. He's bulldozed his way through each conflict, helping bolster his staggering popularity in Newfoundland and Labrador.
But his latest gambit - rushing through legislation to seize many of AbitibiBowater's assets in the province after the paper giant announced its mill would close - promises to have effects that reverberate far beyond Newfoundland.
A spokesman for AbitibiBowater said the company would be seeking "a very, very significant sum of money" for its assets, money for which Ottawa could be responsible as signatory to the North American free-trade agreement.
And observers say the case may raise the constitutional question of whether Ottawa can sign treaties binding provinces without their consent.
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None of that seems to matter locally. Public opinion in the province has rallied behind Mr. Williams. Callers to a talk-radio show were near-unanimous in favour after his government introduced the legislation expropriating the company's resource rights and hydroelectric facilities.
"It was the lift-up this province needed at the moment," said Brian Madore, assistant news director at VOCM in St. John's. "It was, 'Take that, Abitibi.' "
The company isn't backing down in the face of public opinion, though, and is claiming breaches of NAFTA's Chapter 11 provisions on expropriation and compensation, minimum standard of treatment and non-discrimination.
If the dispute cannot be resolved within six months, the company can bring its argument before a NAFTA panel to determine its legal rights.
Compensation is clearly an important issue for AbitibiBowater, which acknowledges that it is going through hard times. Company officials say they would like to arrive at a satisfactory figure through negotiation, but warn they will "do everything necessary" to protect their shareholders.
"They're not going to settle the compensation in six months, I just don't think that could be done," predicted Lawrence Herman, international-trade counsel at Cassels Brock & Blackwell LLP.
The province's position is that AbitibiBowater's resource rights were contingent on the company keeping the mill open. Only their physical assets warrant compensation, according to the legislation, which also gives cabinet authority to set the amount.
The company has challenged the validity of that approach.
Mr. Williams's belief he can determine the level of compensation "is completely illegal," said Seth Kursman, vice-president of communications and government relations for AbitibiBowater. "NAFTA is unequivocally clear on that, they must provide us with fair market value."
And in a recent letter signed by CEO David Paterson, the company makes clear that it believes the NAFTA breaches include the loss of its resource rights.
"Investment is very broadly defined in Chapter 11 and it would include a licence," noted Michael Robinson, of Fasken Martineau.
"If you have a licence to cut timber, that has a value," he added. "Whatever licence they have is an investment with value, and fair market value has to be paid if you take it away."
Chapter 11 of NAFTA takes a broad view of fair market value, stipulating it must include "going concern value, asset value including declared tax value of tangible property, and other criteria, as appropriate." Compensation also must be paid "without delay" and must include interest from the date of expropriation.
A nonbinding agreement that AbitibiBowater announced this week to sell hydro assets in Ontario offers a possible hint at the value of what was seized in Newfoundland. Under that deal, the company will receive $197.5-million, before expenses, and the buyer will also assume $250-million in term debt held by a company 75-per-cent owned by Abitibi.
The assets in Ontario had a combined capacity of about 137 megawatts. The company's hydro assets in central Newfoundland had a combined capacity of about 116 megawatts.
Mr. Kursman wouldn't speculate on the overall compensation figure Abitibi will seek.
If the dispute goes to a NAFTA panel and is decided in favour of the company, penalties will be assigned to Ottawa. With relations between St. John's and Ottawa so sour, and Newfoundland not having ratified the treaty, some are wondering if it will refuse to pay back the money.
The validity of that position is raising debate. Under the 1933 Labour Conventions decision by the British Privy Council, then the highest court in the land, provinces have to agree to international treaties that affect their exclusive jurisdiction.
"This could result in a very important test of the constitutional competence of the Parliament of Canada to ratify international treaties," Mr. Herman said.
"If that authority was overturned, it would affect Canada in a major way. Because it would mean that the federal government would basically lose the authority to enter into free-trade agreements with other countries."
But Mr. Herman said that attempts by the province to claim it is not bound by NAFTA would be unlikely to fly.
"The stronger view, by far, is that in matters of national importance and in matters of trade and commerce, the federal government has the power both to sign and enforce international agreements."
That opinion was backed by Jacob Ziegel, a professor in the faculty of law at the University of Toronto. He said the 1933 case "really doesn't have much bearing" on this situation: "In my view, the federal government should have more than adequate jurisdiction in international agreements."
But Mr. Robinson is not so sure and called the constitutional issue a "sleeping giant."
He advised Canada on the 1989 free-trade agreement and remembers then-Ontario premier David Peterson commissioning legal opinions saying it was unconstitutional for Ottawa to purport to bind the provinces.
Various provinces, including Ontario, ultimately cut deals involving "adjustment payments" from the federal government, he said. And when NAFTA was being brought in, Ottawa gave the provinces the right to exclude their laws that didn't comply with it.
They all did, but none of the provinces formally agreed to be bound by this treaty either.
"The constitutional case never arose," Mr. Robinson said. "Many academics and others have been waiting for it to come up again. We predicted that Chapter 11 would do that. A province would breach NAFTA and argue that it isn't bound by it, among other defences. So this Newfoundland expropriation is that case."
Does he predict a constitutional dust-up? Probably not. He thinks the Supreme Court wouldn't uphold the Labour Conventions decision, but also thinks this dispute won't make it there.
"I am betting that we will do it again the 'Canadian way' and cut deals, despite the truculence of Danny," he said.
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